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Does it matter whose account we contribute to?

June 12, 2023

Saving for retirement is an important goal for couples who want to carry their standard of living into their non-income-earning years. One of the questions I get from clients is "Does it really matter whose account we contribute to?" Especially if you live in a community property state, and investments are perceived as shared assets anyway, does it really matter whose account you contribute to?

I believe wholeheartedly that the answer is yes. Here's why...

  1. Education and Empowerment

Contributing to your own retirement accounts allows you both to become familiar with investing and how it works. When you delegate the financial stuff to your partner, not only are you not getting a say in how your investments are managed, you're not getting a chance to become familiar and financially confident. I can't tell you how many times a spouse (often the wife) is completely overwhelmed after their spouse passes away or they get divorced, because- quite frankly, they're clueless! It often comes down to the fact that they missed the opportunity to learn little by little over the years, and now they need to figure it all out at once. And fast. (Don't beat yourself up if this is you- ask for help!)

  1. Equal Ownership

When both spouses contribute to their retirement accounts, it reinforces a sense of equal ownership. Think of it this way- imagine that you and your spouse run a business together, both working full time, and one of you gets paid $90,000 and one of you gets paid $10,000. Even if both paychecks go into the same account, there's a power differential, and one of you feels like the money is more "theirs" than "ours". Psychological impressions matter, and it's important for both partners to feel that they are contributing to their retirement.

  1. Higher contributions

By contributing to their retirement accounts individually, couples are likely to save more, as they have two accounts to fund. Most likely they'll also have a higher contribution limit when contributing to two accounts. 

  1. Enhanced Communication

When couples contribute to their retirement accounts together, there are additional open lines of communication about their finances. These discussions foster trust and understanding, leading to better decision-making as a team. There's less likelihood of resentment around doing it all yourself, or being left out of it all. Less likelihood for regrets around poor decision-making when you have two people working together. Also, likely a better grasp on what your retirement looks like and how fully funded it is.

  1. Setting a Positive Example

While I believe that it's important for both men and women to set an example of saving for their future, I must emphasize- it is especially important for women to model for their daughters. After decades, even centuries, of investing being more of a man's job, it's going to take more than a decade or two to shift that culture norm. It is incredibly important for girls to see their moms, aunts, grandmas, earn, manage, and invest their own money. No more deferring to the men for all that. 

So, to make my long answer short, yes- it is important to fund your own retirement accounts.  😅

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